"A visit to an Oceanside, Calif., Walmart on Thursday evening shortly after the store’s 8 p.m. opening found cart after cart brimming with Blu-ray Discs, which were selling for as little as $1.96 in high-profile “bargain bins” in the main aisles. . . .

Meanwhile, at a nearby Best Buy, discs began flying off shelves — or, more accurately, out of bargain bins — within minutes of the store’s 6 a.m. Friday opening. Recent hits such as Sherlock Holmes: A Game of Shadows as well as older films such as Traffic were available for $3.99 each on Blu-ray."

Walmart reportedly sold out of an LG Blu-ray player priced at less than $40.

But the current price delta between DVDs and Blu-ray - about $10 - is keeping the DVD, not Blu-ray, the option of choice for buyers for all but a few movies such as Avatar, The Avengers and The Amazing Spiderman. Clearly, $10 more is too much for most people for most movies.

Hollywood's notoriously opaque financials probably mean that no one is capable of a simple cost-benefit analysis, but if Hollywood wants to keep selling physical media they need one. The sunk cost is the movie. Whatever the additional production costs of a Blu-ray are - and they aren't much - the short-term focus on higher profits from Blu-ray is killing the physical media business.

I prefer Blu-ray - just bought The Matrix Blu-ray online for $8 - but not at big markups. And it seems most Americans agree.

Hollywood: WAKE UP! Once consumers stop buying physical media you'll be paying telcos and cable companies for distribution - just as Procter & Gamble pays for store shelf space - and you'll wonder how current execs could have been so stupid. I've been wondering that for years.

Comments welcome, of course. 3D won't save Blu-ray either: only Avatar has a majority of its sales in 3D. And 4k is even further off.